Obama: Let's Get 'Fiscal Cliff' Deal Before Christmas

CNBC.com and Wires

Wednesday, 28 Nov 2012 | 4:47 PM ETCNBC.com

SHARES

President Barack Obama said Wednesday he hoped to reach a deal on the "fiscal cliff" before Christmas but insisted that Congress move now to prevent a middle-class tax increase in January. "Let's approach this with the middle class in mind," he said.

"Our ultimate goal is to get an agreement that is fair and balanced," the president said in a nationally televised statement. "My hope is to get this done before Christmas."

"But the place where we already have, in theory at least, complete agreement right now is on middle-class taxes," Obama said. "If Congress does nothing, every family in America will see their taxes automatically go up at the beginning of next year."

And for a typical family of four, he said, that would mean a tax increase of $2,200. "That means less money for buying groceries, less money for filling prescriptions, less money for buying diapers," Obama said, standing in front of a group of middle-class Americans he had met with earlier. "It means a tougher choice between paying the rent and paying tuition. And middle-class families just can't afford that right now."

He took special note of reports that some Republicans have expressed a willingness to extend the current expiring tax rates for households earning less than $250,000. Conservative Oklahoma GOP Rep. Tom Cole told GOP colleagues in a private meeting on Tuesday that it's better to extend tax cuts for 98 percent of taxpayers than engage in a prolonged fight that risks increasing taxes on everyone.

"I'm glad to see, if you've been reading the papers lately, that more and more Republicans in Congress seem to be agreeing with this idea that we should have a balanced approach," Obama said, noting that the Senate has already passed legislation to extend current rates to those middle class taxpayers.

"The Democrats in the House are ready to vote for that same bill today," he said. "If we can get a few House Republicans to agree as well, I'll sign this bill as soon as Congress sends it my way. I've got to repeat: I've got a pen. I'm ready to sign it."

Earlier, Republican House Speaker John Boehner took issue with Cole, saying: "The goal here is to grow the economy and control spending. You're not going to grow the economy if you raise the top 2 percent rates. It'll hurt small businesses and it'll hurt our economy, why this is not the right approach."

Boehner expressed optimism about a fiscal deal, saying he was willing to put revenues on the table if they are accompanied by spending cuts but insisted that income tax rates not be raised.

Those comments were in contrast to an assertion Tuesday by Senate Majority Leader Harry Reid, who said the talks had made "little progress."

"I am optimistic that we can continue to work together to avert this crisis sooner rather than later," Boehner told reporters. "We (Republicans) put revenue on the table as long as it is accompanied by serious spending cuts to avert this crisis."

Boehner spoke hours before a group of CEOS went to the White House to meet with Obama. As part of his campaign, Obama is promoting a new hashtag — #My2K — on Twitter and other social media in a reference to the estimated tax increase for a typical middle-class family of four if the Bush tax cuts expire on Dec. 31. (Read More: Obama: Don't Want a Tax Hike? You Better Tweet It!)

In a sign of reconciliation, the White House announced that Obama would have a private lunch at the executive mansion on Thursday with the man he defeated on Nov. 6 — Mitt Romney.

Many of them went to Capitol Hill to press Congress members to come up with a deal before the end-of-year deadline.

"You don't want to burden people who are least able to afford it, but at the same time you don't want to disincentivize the economy and be too restrictive and cut off growth," Blankfein said. "So the answer is going to be ... entitlements have to be touched and revenues have to be touched." (Read More: Everything Must Be Touched in Fiscal Debate: Blankfein.)

At a news conference following a meeting with congressional leaders, Aetna chief Mark Bertolini said the country was "one grand bargain away from leading the world out of its recession and dominating the world's economy for the next 50 years." But he warned that time was running out.

Blankfein on the Looming Fiscal Cliff

CNBC's Eamon Javers speaks to Goldman Sachs CEO, Lloyd Blankfein about the consequences of not reaching an agreement on the "fiscal cliff."

Much of the focus during negotiations seeking an alternative to $671 billion in automatic tax increases and spending cuts beginning in January has centered on whether Republicans would agree to raising taxes on the wealthy. Deep divisions have surfaced among Senate Democrats over whether to include cuts to popular benefit programs like Medicare.

Obama has insisted repeatedly that tax increases on the wealthy must be part of any deal, even as White House officials concede that government benefit programs will have to be in the package, too.

"It is the president's position that when we're talking about a broad, balanced approach to dealing with our fiscal challenges, that that includes dealing with entitlements," White House press secretary Jay Carney said Tuesday, referring to the mammoth Social Security and Medicare programs.

But even if GOP lawmakers agree to raise taxes, there is no guarantee Democrats can come up with enough votes in the Senate to cut benefit programs — as Republicans are demanding.

"I hope not if it means Social Security or Medicare benefit cuts," said Sen. Sheldon Whitehouse, D-R.I.

There's a growing consensus among Senate Democrats and the White House that Social Security should be exempt from any deficit-reduction package. But some centrist Democrats in the Senate argue that fellow Democrats must be willing to consider cuts to Medicare and Medicaid in order to get concessions from Republicans on taxes.

"It has to be both — a significant revenue increase as well as spending cuts," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.

Sen. Kent Conrad, D-N.D., who is retiring as chairman of the Senate Budget Committee, said rising health care costs in Medicare and Medicaid are helping to drive future spending, making them an essential part of a long-term deficit-reduction package.

"I've been part of every bipartisan group here. We've always put everything on the table," Conrad said. "If you're going to solve this problem, you're going to have to deal with where the spending is and the revenue can be raised."

But senators like Baucus and Conrad increasingly are being drowned out by other Democrats emboldened by the recent election results to fight against benefit cuts.

Sen. Tom Harkin, D-Iowa, said he is willing to find savings in Medicare and Medicaid by making them more efficient. But, he said, he won't support benefit cuts.

"I think the election spoke very strongly about the fact that the vast majority of American people don't want to cut these programs," Harkin said.

Sen. Dick Durbin, the No. 2 Democrat in the Senate leadership ranks, said he doesn't think there should be a rush to overhaul entitlement programs in connection with the move to avert the fiscal cliff in the remaining weeks of the current session.

What Is the Fiscal Cliff?

Complete Coverage of the Fiscal Cliff

The Illinois Democrat said in a CNN interview Wednesday that "what we need to put on the table short-term is mandatory deficit reduction." Durbin said entitlement reforms to programs like Medicare and Medicaid should be "part of the long-term strategy" of reining in federal deficits.

Durbin repeated his position that Social Security should not be a part of the discussions. And he said that "we want to make sure that Medicare at the end of the day is a program that is solvent and we can count on it for years to come."

Congress and the White House are devoting the next three weeks to finding at least a bridge over the fiscal cliff by reducing the sudden jolt of higher taxes and spending cuts in January while laying a framework for addressing the nation's long-term financial problems next year.

Obama wants to let tax rates rise for wealthy families while sparing middle- and low-income taxpayers. Some Republican leaders, including Boehner, have said hey were willing to consider making the wealthy pay more by reducing their tax breaks. But most Republicans in Congress adamantly oppose raising anyone's tax rates.

Negotiations are going slowly as each side waits for the other to make concessions.

Democrats already have tried to take Social Security off the table. Carney said Monday that changes to the massive retirement and disability program should be done separately from any plan to reduce the deficit. That's the same position taken by 28 Democratic senators and independent Sen. Bernie Sanders of Vermont in a letter to fellow senators in September.

"We will oppose including Social Security cuts for future or current beneficiaries in any deficit-reduction package," said the letter, which was signed by many top Democrats, including Reid. In the House, Democratic leader Nancy Pelosi has taken the same position, not only on Social Security, but also on Medicare and Medicaid.

"There hasn't been the slightest suggestion about what they're going to do about the real problems, and that's entitlements," said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. "There's a certain cockiness that I've seen that is really astounding to me since we're basically in the same position we were before" the election.

Durbin has tried to find common ground, saying he would be willing to require wealthy seniors to pay more for Medicare benefits.

"If we simply stand by and say `don't touch Medicare in any way, for any reason, ever' we are inviting a crisis that opponents can exploit to eviscerate Medicare or even to end it," Durbin said Tuesday. "Progressives should be willing to talk about ways to ensure the long-term viability of Social Security, Medicare and Medicaid, but those conversations should not be part of a plan to avert the fiscal cliff."